Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: 4.8
Article rating: 5.0
Article rating: 3.0
Article rating: No rating
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: 4.5
Article rating: No rating
Article rating: No rating
Article rating: 4.2
Article rating: 5.0
Article rating: 4.0
Article rating: No rating
Article rating: No rating


RBI to go into aggressive easing mode: UBS

Author: PTI/Wednesday, March 6, 2019/Categories: Economy

RBI to go into aggressive easing mode: UBS

Mumbai - With inflation likely to remain under 4 per cent till October, the Reserve Bank may cut rates to the tune of 75-100 basis points in the next financial year, says a report.

The forecast also includes the 25 basis points reduction in the February policy.

Headline CPI inflation is likely to remain below 4 per cent until October and averages at 3.8 per cent in FY20, a UBS report said.

The Swiss brokerage bases its forecast on tepid food inflation for the fifth consecutive year, normal monsoons and stable crude prices.

“Amidst benign inflation, we expect the monetary policy committee to cut the policy rate a cumulative 75-100 basis points in this cycle (including the recent 25 basis points rate cut),” the report said.

In the sixth bi-monthly monetary policy announced on February 7, the RBI reduced the repo rate by 25 basis points to 6.25 per cent and also changed the policy stance to 'neutral' from the earlier 'calibrated tightening', signalling further softening on its approach to rates.

The report said while it expects 75-100 bps policy easing in FY20, the monetary transmission in terms of lower lending and deposit rates will be partial and delayed due to a wide gap between credit and deposit growth.

The incremental credit deposit ratio also remains elevated, above 100 per cent, it said.

“Going forward, it will be intriguing to see the manner in which the RBI plans to reconcile the emerging trade-off between short-term inflation dynamics with the medium-term objective, since an accommodative policy bias could result in boosting consumption over capex and widened macro stability risks over time,” it said.

Print Rate this article:
No rating

Number of views (169)/Comments (0)

rajyashree guha


Other posts by PTI
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free